Shares of Intel, a major player in Silicon Valley, saw a surge in value to its highest level in months, defying a trend of underperformance in recent years as investors leaned towards Intel’s competitors in the artificial intelligence sector. Intel’s shares rose by 2% to over $35 at the start of the trading day, marking a significant increase since April 18, before settling for a more modest gain of 0.2% by mid-morning. This positive momentum followed a 6.2% rise in share value on the previous trading day.
The uptick in Intel’s stock was attributed to a note from analyst Ben Reitzes of Melius Research, who suggested that the previously “unloved” Intel stock might be due for a “seasonal bounce” in the context of a broader “recovery trade” for stocks with lower expectations in artificial intelligence. Notably, Intel emerged as the third-best-performing stock in the S&P 500 for the month of July, trailing behind Tesla and Corning. This uptrend in Intel’s stock price was part of a broader rally in the semiconductor sector, with the Philadelphia Stock Exchange’s semiconductor index also showing gains, driven by notable increases in shares of Nvidia and Micron.
Contrary to this recent positive development, Intel had experienced a challenging first half of the year, being one of the worst-performing stocks on the S&P through the initial six months of 2024, with a year-to-date dip of 32% in its share price. The company’s stock has consistently lagged behind its high-tech peers in terms of performance in recent years, with Intel’s returns over the past 12 months and three years significantly trailing companies like Nvidia, AMD, Broadcom, and Micron. This lower performance is not only attributed to Intel’s struggle to capitalize on the growing interest in generative AI but also reflects a long-term decline in earnings, with 2023 marking the company’s worst year for revenue since 2013 and net income since 2001.
Looking ahead, Intel is scheduled to report its quarterly results later in the month, with analysts predicting a modest 0.2% increase in second-quarter revenue. This projected growth pales in comparison to the substantial expansion reported by market leader Nvidia in the previous quarter, accentuating the challenges that Intel may face in the highly competitive semiconductor industry.
In conclusion, Intel’s recent stock price surge signals a potential turnaround for the company amid a broader recovery in the semiconductor sector. However, challenges remain as Intel grapples with its underperformance compared to industry peers and faces expectations for modest revenue growth in upcoming quarterly reports. The market will be closely watching Intel’s performance in the coming months to assess whether the current rally is sustainable and indicative of a larger resurgence for the company.
Article Source
https://www.forbes.com/sites/dereksaul/2024/07/09/intel-stock-rallies-to-3-month-high-as-unloved-ai-name-pares-losses/